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Innovation and ESG risk control: Omega partners with Local Government Super

07 Jun 2012
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Specialist investment manager, Omega Global Investors (Omega) has announced an innovative global government bond strategy that breaks new ground in the delivery of risk-controlled asset management in the emerging field of sustainable investing.

The strategy was co-developed by Omega with Local Government Super (LGS), a leader in sustainable investment. With over $3 billion in funds invested in responsible strategies, LGS’s commitment to sustainable investment is by far the largest of any Australian super fund.

LGS has awarded an initial $170m mandate to the Sustainable Global Government Bond Fund, to be managed by an investment team jointly led by senior Omega investment executives Mathew McCrum and Andrew Gruskin.

“The strategy is leading edge – in fact we believe it to be an Australian first, and one of just a handful created around the world. It was co-developed over nine months between Omega and LGS, which is an industry super fund with deep commitment to ESG and a signatory to UNPRI principles on sustainable investment practices,” Omega Director of Investments, Mr McCrum said.

“The strategy integrates with Omega’s existing risk-controlled approach to fixed income investing, built upon our proprietary financial health rating filters,” said Mr McCrum.

“Our aim is to choose global government bonds derived from fiscally robust and politically stable nations but which also pass meaningful ESG filters. These include nations with strong environmental awareness and governance standards, and with sound score cards in the areas of regulation and human rights.

When constructing the portfolio, Mr McCrum explained the aim was to manage risk without compromising alpha generation.
“We also understand through our performance track record that it is possible to construct high quality, well-diversified bond portfolios that also deliver a strong sustainability dividend above benchmark,” he said.

LGS Chief Investment Officer Craig Turnbull said risk minimisation across the spectrum of investment and operational risks has become a critical component of effective asset allocation.

“We are looking to develop innovative strategies that manage or mitigate our ESG risk exposure, and to capitalise on investment opportunities across all asset classes to achieve solid returns for our members. The sustainable global government bond strategy is a great example of our principles in action.”

“We welcome the partnership with Omega, and value the ability to co-produce innovative approaches that allow us to continue leading the way in investing wisely and responsibly in a world that is rapidly changing,” Mr Turnbull said.

7 June 2012

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